M/s. Sukumar and Vanithamani Ammal Charitable Trust, Salem V. ITO, Salem

ITA 1516/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0969 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-01-2013
• Assessment Year: misc
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Assessee Lawyers: G BASKAR
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.1516/MDS/2012 ASSESSMENT YEAR : N.A M/S SUKUMAR AND VANITHAMANI AMMAL CHARITABLE TRUST ERAGUNDAPATTY, MECHERI METTUR TALUK SALEM DISTRICT VS THE ITO WARD III(1) SALEM (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : SHRI T.N.BETGIRI, JT. CIT DATE OF HEARING : 16-01-2013 DATE OF PRONOUNCEMENT : 24-01-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE A GAINST THE ORDER OF THE CIT, SALEM, DATED 30.5.2012, BY RAISING THE FOLLOWI NG GROUNDS: (1) THE COMMISSIONER OF INCOME-TAX IS NOT JUSTIFI ED IN REFUSING TO REGISTER THE TRUST UNDER SECTION 12AA IN THE CIR CUMSTANCES OF THE CASE. (2) THE OBSERVATION OF THE COMMISSIONER THAT, THE ACTIVITIES OF THE TRUST POINT TOWARDS ITS BEING FORMED FOR THE BENEFIT OF A MAN AND HIS WIFE, IS FACTUALLY INCORRECT. I.T.A.NO. 1516/12 :- 2 -: (3) HOLDING THAT THE TRUSTS OBJECTS ARE NON-GENUI NE CONSEQUENTLY, IS NOT IN ORDER. (4)THE REFUSAL ORDER PASSED WITHOUT GIVING AN OPPOR TUNITY OF HEARING, REQUIRED BY PROVISO TO SECTION 12AA(1) IS NOT LEGALLY VALID. (5) COMMISSIONERS LETTER DATED 11.1.2012 HAD STAT ED THAT A DATE OF HEARING WOULD BE INTIMATED, ON RECEIPT O F THE TRUSTS REPLY THERETO; THE REFUSAL ORDER REFERS TO SUCH REPLY FILED. FOR THESE AND OTHER REASONS, WHICH MAY BE STATED AT THE TIME OF HEARING OF THE APPEAL, IT IS PRAYED THAT TH E COMMISSIONER OF INCOME-TAX MAY PLEASE EXPENDITURE DIRECTED TO REGISTER THE TRUST UNDER SECTION 12AA. 2. THE A.R OF THE ASSESSEE SUBMITTED THAT THE SOLE IS SUE INVOLVED IN THE APPEAL WAS THAT THE CIT WAS NOT JUSTIFIED IN REFUSING TO REGISTER THE TRUST UNDER 12AA OF THE ACT. HE SUBMITTED THAT THE ASSESSEE FILED APPLICATION IN FORM NO.10A ON 30.11.2011 FOR REGIST RATION U/S 12A OF THE ACT. THE TRUST WAS CONSTITUTED BY A DEED EXECU TED ON 5.12.2010 REGISTERED WITH REGISTRAR, MECHERI. THE CIT HAS RE FUSED TO GRANT REGISTRATION TO THE TRUST AS APPLIED FOR ON THE GRO UND THAT THE TRUST WAS SETTLED BY HUSBAND AND WIFE AND INITIAL FUNDS F OR THE TRUST HAVE BEEN TRANSFERRED FROM CAPITAL FUND OF WIFE, WHO IS DOING JEWELLERY BUSINESS AND THAT THE TRUST WAS FORMED FOR PRIVATE BENEFIT OF TWO INDIVIDUALS WHO ARE HUSBAND AND WIFE AND THEREFORE, THE TRUST WAS NON-GENUINE IN SO FAR ITS STATED OBJECTS ARE CONCER NED. HE SUBMITTED I.T.A.NO. 1516/12 :- 3 -: THAT THE OBSERVATION OF THE CIT THAT THE TRUST WAS FORMED FOR THE BENEFIT OF HUSBAND AND WIFE WAS NOT FACTUALLY CORRE CT. HE REFERRED TO THE TRUST DEED DATED 5.12.2010, A COPY OF WHICH IS FILED AT PAGES 3 TO 10 OF THE PAPER BOOK AND POINTED OUT THEREFROM T HAT THE OBJECTS OF THE TRUST ARE TO CONSTRUCT TEMPLES, CONDUCT POOJAS, ROUTINE FESTIVALS, CONDUCT POOR FEEDING, ANNADANAMS, RELIGIOUS FUNCTIO NS, MARRIAGES FOR NEEDY PERSONS AND SPREADING OF INDIAN CULTURE. TH E OBJECT OF THE TRUST WAS ALSO TO CONDUCT MEETINGS, SEMINARS, SATSA NGS, DISCOURSES, SPIRITUAL AND LIFE ORIENTED VALUE BASED CAMPS. ON E OF THE OBJECTS WAS ALSO TO PUBLISH AND SELL RELIGIOUS/PHILOSOPHY BOOKS , AND TO ESTABLISH, RUN, MAINTAIN LIBRARIES WHICH CONSIST OF ALL TYPES OF RELIGIOUS/PHILOSOPHY BOOKS. HE SUBMITTED THAT THE OTHER CLAUSES OF THE TRUST DEED PROVIDED THAT INCOME OF THE TRUST PROPERTIES WOULD BE UTILIZED ONLY FOR THE AFORESAID OBJECTS IN INDIA ALONE AND THAT NO PO RTION OF THE MONEY SHALL BE UTILIZED FOR PAYMENT TO THE TRUSTEES BY WA Y OF PROFIT, INTEREST DIVIDEND OR IN ANY OTHER MANNER AND THAT THE INTENT ION OF THE TRUST WAS NOT TO CARRY ON ACTIVITY TO MAKE PROFIT AND IN THE EVENTUALITY, OR THE TRUST BEING DISSOLVED OR WOUND UP, THE ASSETS O F THE TRUST SHALL BE TRANSFERRED TO A TRUST OR CHARITABLE INSTITUTIONS H AVING SIMILAR OBJECTS AS THAT OF THE TRUST. HE ALSO SUBMITTED THAT THE O BSERVATION OF THE CIT HOLDING THAT THE OBJECTS OF THE TRUST ARE NON-GENU INE IS ALSO NOT IN I.T.A.NO. 1516/12 :- 4 -: ORDER. HE SUBMITTED THAT THE REFUSAL ORDER WAS PAS SED WITHOUT GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE AS REQUIRED BY THE PROVISO TO SECTION 12AA(1) OF THE ACT. HE FURTHER POINTED OUT THAT IN THE CITS LETTER DATED 11.1.2012, IT WAS SPECIFICALLY MENTION ED THAT ON RECEIPT OF THE INFORMATION REQUIRED IN THE SAID LETTER, FURTHE R DATE OF HEARING WOULD BE INTIMATED TO THE ASSESSEE. HE SUBMITTED THAT THE ORDER OF REFUSAL FOR GRANTING OF REGISTRATION WAS PASSED WIT HOUT AFFORDING SUCH OPPORTUNITY TO THE ASSESSEE. 3. ON THE OTHER HAND, THE DR RELIED ON THE ORDER OF TH E CIT. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING TH E ORDER OF THE CIT, WE FIND THAT THE TRUST WAS CREATED ON 5.12.20 10 AND ASSESSEE APPLIED FOR REGISTRATION U/S 12A OF THE ACT IN THE PRESCRIBED FORM NO. 10A ON 30.11.2011. THEREAFTER, THE CIT VIDE LETTER DATED 11.1.2012, A COPY OF WHICH IS PLACED AT PAGES 12 & 13 OF THE PAP ER BOOK, REQUESTED THE ASSESSEE FOR CERTAIN DETAILS AS MENTIONED IN T HE LETTER AND AT THE END OF THE LETTER, STATED AS FOLLOWS: YOU ARE REQUIRED TO FURNISH THE ABOVE INFORMATION IMMEDIATELY RECEIPT OF THIS LETTER. ON RECEIPT OF YOUR DETAILED REPLY ON THE POINTS MENTIONED ABOVE, FURTHER DATE O F HEARING WOULD BE INTIMATED TO YOU. I.T.A.NO. 1516/12 :- 5 -: 5. THE ASSESSEE REPLIED TO THE SAID LETTER ON 15.2.20 12 PROVIDING THE REQUIRED DETAILS, A COPY OF WHICH IS PLACED AT PAGES 14 & 15 OF THE PAPER BOOK. WE FIND THAT THE CIT HAS PASSED ORDER ON 30.5.2012 REFUSING TO GRANT REGISTRATION TO THE ASSESSEE ON THE GROUND THAT THE TRUST WAS SETTLED BY HUSBAND AND WIFE AND THAT IT W AS FORMED FOR THE PRIVATE BENEFIT OF THE HUSBAND AND WIFE AND THEREFO RE, THE OBJECTS OF THE TRUST ARE NON-GENUINE. THE CITS LETTER NOWHER E MENTIONS ABOUT THE REPLY SUBMITTED BY THE ASSESSEE VIDE ITS LETTE R DATED 15.2.2012 IN RESPONSE TO LETTER OF THE CIT DATED 11.1.2012. IT ALSO DOES NOT MENTION ANYTHING ABOUT THE GRANTING OF OPPORTUNITY OF HEARING TO THE ASSESSEE AFTER FILING OF THE DETAILS BY THE ASSESS EE ON 15.2.2012 AS REQUIRED BY HIM WHEREAS IN HIS LETTER DATED 11.1.2 012 HE HAS SPECIFICALLY STATED THAT AFTER RECEIVING THE DETAIL S A FURTHER DATE OF HEARING WOULD BE INTIMATED TO THE ASSESSEE. THUS, IT IS SEEN THAT THE ORDER OF THE CIT REFUSING REGISTRATION U/S 12AA OF THE ACT TO THE TRUST WAS PASSED WITHOUT GRANTING PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE AND THEREFORE, THE SAME CANNOT BE SUSTAINE D IN LAW. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT AND REMAN D THE MATTER BACK TO HIS FILE TO ADJUDICATE THE ISSUE OF GRANTING OF REGISTRATION U/S 12AA OF THE ACT TO THE TRUST AFRESH AFTER CONSIDERING A LL THE SUBMISSIONS OF THE ASSESSEE AND BY PASSING A SPEAKING ORDER. NEE DLESS TO MENTION I.T.A.NO. 1516/12 :- 6 -: THAT HE SHALL ALLOW REASONABLE AND SUFFICIENT OPPOR TUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH AS PER LAW. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 24 TH OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 24 TH JANUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR